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Mirabaud Sustainable Cities

New French government pact strengthens supply/demand dynamics in intermediary housing

The French government has confirmed almost EUR1 billion in financing for the construction of 75,000 intermediate housing units over the next three years, helping to meet demand for an additional 500,000 homes across the country. The pact will be funded by public and private investment, including 14 of France’s largest insurers and the Caisse des Dépôts.

The intermediary housing sector emerged in response to France’s housing crisis and the growing need for affordable mid-level accommodation situated close to transport and employment hubs with strong energy credentials. Rents are above those of social housing but 10-15% more affordable than the open market.

The pledge is the latest development in broader plans laid out by the government to increase affordable housing production and accelerate residential mobility across France - click here for further information.


Why is this news positive for the strategy?

Due to the lack of supply, demand was already strong in this segment of the residential property market. This new pact serves only to strengthen demand further, essentially introducing another buyer into the market for the development projects we finance via the strategy. And at almost EUR1 billion, it is a buyer with significant spending power. Being a rental proposition, intermediary housing is unaffected by changes in base and mortgage rates.

Within the portfolio, we hold several projects due to be sold to intermediary housing operators that should now benefit from the additional demand. For example, we are currently working on a project consisting of a housing complex of 196 units, of which 25% are allocated for intermediary housing. The site is very well situated for working residents, being located 500 meters from the city centre and 700 meters from a train station. We are currently considering a number of other projects that have an intermediary housing element.

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